CMS Doubles its Medicare Price Transparency Efforts

As part of the initiative, price information and formulary alternatives must be in insurers’ explanation of benefits and drug makers must post their list prices in television ads.

CMS administrator, Seema Verma wants healthcare providers to improve their cost transparency as patients need to be aware of the prices they are supposed to pay for their treatments.

The Centers for Medicare and Medicaid Services (CMS) on the 27th of November proposed that Medicare Part D plans adopt a real-time prescription benefit tool of their choosing by January 2020.

As part of the initiative, price information and formulary alternatives must be in insurers’ explanation of benefits and drug makers must post their list prices in television ads.

CMS is also requiring hospitals to have a list of current standard charges in a machine-readable format so consumers know the cost of treatment and can shop for the best price.

In addition, the agency has developed a new Procedure Price Lookup tool to compare Medicare payments and co-payments for certain procedures performed in hospital outpatient units and ambulatory surgical centers. The tool shows the national average copayment amount a member with no Medicare supplemental insurance would pay the provider.

The tool is necessary because the law requires Medicare to maintain multiple payment systems for different types of providers, which can result in CMS and patients paying very different amounts for the same service depending on the site of care.

In a blog post, Verma said that this was a prime example of Medicare’s misaligned financial incentives under which providers can make more money if they treat patients at one location as opposed to another. “The case for price transparency throughout the healthcare system is clear and the need to shop is growing ever more compelling as high deductible plans become the norm,” she added